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Technology - The Good, the Bad and the Ugly

Stephen Crosbie, Protection Director at Aegon talks about how we use technology in the protection market and what we should be thinking about in future.

tecnology - the good, the bad and the ugly

Within the protection industry, we've generally been slow to embrace technological advancements, and customer expectations are much greater than we’ve been able to provide. This presents great opportunities – but if we don’t rise to the challenge, someone else will.

Living in a digital world

No matter where we are or what we do, technology plays an ever-increasing role in our day-to-day lives. From controlling our heating via our smartphones, buying a coffee via contactless payments to monitoring and tracking our health and fitness via mobile apps – we live in a digital world.

So how has the protection industry adapted to this digital age? Slowly is the answer – making those who work in it exposed to someone adapting quicker than us. However, it’s not all bad.

The good

There’ve been some good technological advances that have made the buying, selling and processing of protection policies easier – creating efficiencies for advisers and provider while helping to reduce costs and prices for customers.

So, there can be no doubt – advances in technology has allowed the protection industry to streamline its processes and has helped providers and advisers to cut costs and reduce prices for customers.

The protection industry has changed for the better due to technology improvements.  Unfortunately, it’s not all good.

The bad                                             

Technology is driving us down the road of individual pricing. As we get better at understanding the risks associated with individuals, we can give them an individual price. This is good news for many, but more and more of society will be rated – where protection cover will either become unaffordable or we’ll deem the risk associated with that individual too great and they’ll become uninsurable.

As insurers, we should be pooling risks so cross-subsidies exist. The peace of mind of the many cross-subsidises the few that need to claim. Understanding risks to a level of detail where you can accurately price isn’t necessarily a good thing – leading to selective practices where more and more of the population will find it harder to get affordable cover. Are we in danger of making protection cover a bespoke solution for the individual? We should view digital technology as a fantastic opportunity to improve access to protection for the masses.

The ugly

As an industry, I believe we’re failing society. The need for protection is still there, yet we seem incapable of increasing the coverage of the population. How many times have you heard – ‘It won’t happen to me’ but the reality is - it does, and the consequences are clear to see.  

So how do we use technology to help us increase access to the masses? We need to start thinking differently.

The future – we need to start thinking differently

Customer expectations have grown way beyond what we’re delivering and the fintech start-ups are eyeing up our market. Going forward, it’s crucial we deliver protection solutions in a way customers expect from other industries, for example, Amazon. To do this, we need to consider what the new fintech start-ups are thinking about and who will start to disrupt our industry.

Some things to consider…

Technology is developing at speed. It allows us to think differently and we’ve a fantastic opportunity to use it to increase access to protection products and serve more of the population.

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